Joff Wild

BlackBerry is looking to sell its stake in Rockstar, according to several sources that have been in touch with IAM. The Canadian company, which as Research In Motion was one of the five founders of the NPE after the Nortel auction took place in June 2011, has been involved in talks with prospective buyers over recent months, but as yet has not found anyone willing to commit to a deal.

Although there seems to be some interest in acquiring BlackBerry’s stake in the Ottawa-based NPE, we have been told, there are also several reasons why it is not the highly attractive proposition the cash-strapped telecoms business might be hoping for.

The first is that not all the patents acquired by Rockstar Bidco as a result of the Nortel auction ended up with the Rockstar Consortium NPE. Instead, a number of them have been transferred to individual shareholders, including a tranche of over 1,000 that are now in Apple’s hands. Many of these are considered to be highly valuable.

What’s more, each of the five Rockstar owners has a minority stake in the NPE, meaning that anyone coming in would have to work closely with the other owners to affect decision-making. Given that a newcomer’s priorities could well differ from those of the other four that may prove to be a challenge.

Finally, there are concerns that when it comes to sales, at times the strategic needs of the majority of the owners may constrain the ability of Rockstar to get the best price possible for patents – as some potential purchasers of rights might be deemed off limits. Although Rockstar has made commitments with regards to its licensing operation to the US Department of Justice and Federal Trade Commission, these do not cover sales, which in any case are not a priority for the NPE at the moment.

Last month, BlackBerry announced a 40% fall in revenue for financial year 2012, as well as a GAAP net loss of $628 million. In 2011, the company revealed that its contribution to the $4.5 billion paid for the Nortel patents was $770 million. If it could sell its stake and recoup even half of that it would represent a healthy and much-needed cash boost. Whether it will be able to, though, is very much open to question; and by remaining as a Rockstar owner, the company can expect a steady income stream over the coming years as the NPE monetises the 4,000 patents under its control. 

Politically, though, retaining an interest in Rockstar may prove tricky for BlackBerry. Only three weeks ago it joined Google, Earthlink and Red Hat in submitting a paper to the DoJ and FTC in which it called on them to investigate the activities of NPEs and privateers in particular; stating: “So-called “privateering” amplifies the threat to innovation and competition already posed by PAEs … Privateering poses numerous perils to competition, consumers and innovation.” Many might consider Rockstar Consortium, which is owned by five operating companies and seeks to monetise patents which they purchased, to be one of the world’s largest privateering operations.

When contacted by IAM, BlackBerry declined to comment. “BlackBerry does not comment on rumours or speculation,” stated an email sent to us by the company’s media relations team.